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Garment Manufacturer’s Shares Fall on Cambodia Debut

The long-awaited launch of Grand Twins — the CSX’s second initial public offering — opened Monday morning.

PHNOM PENH, Cambodia — The share price of Cambodia’s first listed private company, Taiwanese garment manufacturer Grand Twins International (GTI), fell by close to 5 percent at the close of its first day of trading on the Cambodia Securities Exchange (CSX) on Monday.

Following the majority state-owned Phnom Penh Water Supply Authority’s entry in April 2012, the long-awaited launch of Grand Twins — the CSX’s second initial public offering — opened Monday morning trading at 9,700 riel, or $2.41 at current exchange, and finished trading at 9,220 riel, or $2.29, at the market’s close at 1 pm.

“The first day of trading was quiet, and for the young stock exchange, it was disappointing to see GTI decline by 4.95 percent,” said Scott Osheroff, regional analyst for Asia Frontier Capital Ltd, a hedge fund investing in publicly listed companies throughout Asia.

Osheroff said GTI’s price was expensive compared with competitors in the region, which may lead investors to focus on stocks in countries such as Pakistan and Bangladesh.

“Regarding GTI’s long-term prospects on the CSX, this will largely be dictated by what type of earnings per share growth the company can achieve as it begins to execute on its robust plans for expansion,” he said Monday.

With more than 5,600 employees, GTI is Cambodia’s second largest garment factory. Producing about 650,000 articles of clothing each month for global brands such as Adidas and Reebok, GTI raised close to $19.3 million, floating a 20 percent stake in the company through the release of eight million shares.
Much of the capital raised will be used to fund expansion, with a $10 million factory already under construction that will see the GTI workforce swell by 2,300.

“We are capable of producing any kind of sportswear, we are the best manufacturers of jackets. This is the most complicated item for manufacturers; it requires highly developed skills,” said GTI’s chief executive officer Liao Chung-Te before trading commenced on Monday.

According to Stephen Hsu of chief underwriting firm Phnom Penh Securities, Monday’s dip was a reflection of Cambodia’s nascent stock exchange.

“Investors still don’t have enough confidence in this market,” he said.

Hsu cautioned that the 4.95 percent decline should not be taken as a barometer for the company’s long-term outlook, and referred to GTI’s annual profit margin. GTI recorded a $7.3 million net profit in 2013.